Tax Demand Quashed: Procedural Flaws Invalidate Notice, Mandate Fresh Hearing with Partial Tax Payment and Responsive Opportunity

HC quashed tax demand order due to procedural irregularities in notice service. Court found potential breach of natural justice as petitioner could not access GST portal notices. Order remanded for reconsideration, requiring petitioner to pay 10% disputed tax and submit reply within two weeks. Respondent directed to provide fair hearing and issue fresh order within two months, preserving petitioner's legal contentions.

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Issues involved: Challenge to order u/s breach of principles of natural justice, non-receipt of show cause notice, tax demand discrepancy between GSTR 3B and GSTR 1 returns.

Challenge to order u/s breach of principles of natural justice:
The petitioner challenged the order dated 29.02.2024 primarily on the ground of breach of principles of natural justice. It was asserted that the intimation and show cause notice were uploaded on the GST portal, but the petitioner could not access them, leading to non-response to the notice. The impugned order referred to a reply filed by the petitioner, which the petitioner did not actually submit, indicating a lack of application of mind.

Non-receipt of show cause notice:
The petitioner contended that the show cause notice was not accessible on the GST portal, preventing a response. However, the learned Government Advocate stated that the notice was also emailed to the petitioner. The tax demand was confirmed without hearing the petitioner, with the court noting that the petitioner should have continuously monitored the GST portal to avoid such discrepancies.

Tax demand discrepancy between GSTR 3B and GSTR 1 returns:
The tax demand in question pertained to a discrepancy between the GSTR 3B and GSTR 1 returns. The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand. The court quashed the impugned order to provide the petitioner an opportunity for a hearing, remanding the matter for reconsideration. The petitioner was directed to remit the 10% disputed tax demand within two weeks and submit a reply to the show cause notice within the same period. The respondent was instructed to provide a reasonable opportunity for a personal hearing and issue a fresh order within two months of receiving the petitioner's reply, leaving all contentions open to the petitioner.

This judgment highlights the importance of adherence to principles of natural justice, proper communication of notices, and the responsibility of taxpayers to monitor official portals for updates and discrepancies to ensure fair proceedings in tax matters.

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